In the interest of keeping our clients fully aware of their legal and tax obligations, information about the Corporate Transparency Act (CTA) has graced these pages before. At first, the effective date for compliance for pre-2024 companies was December 31, 2024. Newly formed companies were required to comply within 90 days of formation during 2024, dropping to 30 days for 2025 and later. Compliance meant filing a beneficial owners information (BOI) report with the Financial Crimes Enforcement Network (FinCEN), a branch of the Treasury Department. For most companies, filing was fairly straightforward, and the rules potentially applied to 32 million entities.
Compliance Challenges and Shifting CTA Deadlines
Not everyone was a fan of the rules, and enforcement of the CTA was off, then on again, off and on again. In the most recent iteration of on again, the deadline for pre-2024 entities to comply was March 21, 2025. I stopped putting out alerts about the CTA machinations because each time one came out, there was another 180-degree turn. Better to wait until the dust settles. Has it settled?
Current Status and Implications for Domestic Companies
On Sunday, March 2, 2025, the Treasury Department announced that it won’t enforce the CTA against US citizens or domestic reporting companies. Treasury left the door open to enforce the CTA against non-US citizens and foreign reporting companies. This, despite the fact that many of the money laundering situations that have been found involve foreign criminals using domestic entities. While the CTA would appear to be dead in the water for domestic reporting companies, the situation is fluid. Most are taking a wait-and-see approach, but no domestic reporting company should be feeling the pressure to file a BOI report at the moment.
Looking Forward: Awaiting Clear Guidance
Hopefully, Treasury will develop guidance in some form that will be clear and put to rest the frustrating flip-flopping that businesses have tried to navigate over the last year. Stay tuned.
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